Business lessons from the Dead

The March issue of The Atlantic carries an engaging article, "Management Secrets From the Grateful Dead."

In it, Joshua Green writes: "The Dead's influence on the business world may turn out to be a significant part of its legacy… The band pioneered ideas and practices that were subsequently embraced by corporate America."

This is not headline news to blfr readers (see my earlier post and comments) but it's nice to see some mainstream acceptance of the notion that rock bands have a few things to teach us in business matters.

Green goes on to argue that the Dead were savvy businessmen who jumped all over merchandising as a key revenue source and were ahead of the curve in their "customer first" orientation and determination to deliver superior customer value.

He lauds the band's adaptability in allowing fans to tape live performances, beginning in the early '70s, which created a larger audience for their music—an example of the Dead's already-developed give-it-away-free business model. (By then they were performing more free concerts than any other band around.)

Not surprisingly, one of the band's lyricists, John Barlow, became a founding member of the Electronic Frontier Foundation and an influential Internet sage. He wrote in Wired in 1994: "The best way to raise demand for your product is to give it away." (This further establishes the claim that the Dead were a prime contributor to the free ethos of the net.)

As Barlow told Green:

"What people today are beginning to realize is what became obvious to us back then—the important correlation is the one between familiarity and value, not scarcity and value.

If I give my song away to twenty people, and they give it to twenty people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced. That was the value proposition with the Dead."

These free-thinking improvisers—reviled in some quarters as radical, drug-addled, anti-capitalist hippies—turned out to be one of the most profitable bands of all time. (A nice touch of green for Uncle John's Band.)

I wonder if it's coincidental that Google co-founder Larry Page was raised on a diet of Grateful Dead concerts by his Deadhead dad?

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  1. How can they be called the Dead when they just won't die? But Barlow's cool, with his involvement with the EFF and WELL. And the band was pretty tech savvy. They also did their share of benefits and fundraisers for worthy causes.

  2. Doug, I think the Dead's immortality, so to speak, is a function of their improvisatory nature, extending far beyond their business affairs. The Atlantic article focused on their adaptive marketing approach - or what business professor Barry Barnes called their "strategic improvisation." But they're best known of course for their musical improvisation - their jamming. They've never played a song twice the same way. (I'm not sure they could if they wanted to. Their brains aren't wired that way.) They freely admit their performances are live rehearsals.

    (The WELL, to those who don't know, is the Whole Earth 'Lectronic Link.)

  3. Ah yesh....the Dead! They know and knew full well what they were and are doing business wise....they knew what worked and what didn't. I try to incorporate some of their ideas into the business workings of Alia, though I won't get into details here right now. Between my time with certain sound men, the Dead, the Airplane, and Max Creek, I've been working tech innovations into Alia also. More another time....

    1. Yes, the Dead's famous "Wall of Sound" deserves mention as yet another form of customer satisfaction and technical innovations introduced into the market place that are now adopted by all large-venue sound designers.

      It actually began in 1969 as an idea from Ron Wickersham to develop the best scientific method of delivering the sound of his new bass guitar (custom made for Phil Lesh) so that both the audience and the band could hear it clearly and cleanly at every point in the room. With the help of Don Davis, they discovered that a vertical column of speakers propagated sound waves in the direction of most even horizontal coverage with the highest efficiency, while controlling vertical propagation, creating the highest sound density with the least room reflections.

      This idea was flushed-out to include all the instruments so that a row of individual columns of speakers for each instrument could then be placed all together to further fortify the low-end and control directivity, thus forming a wall. To complete the package, noise-cancelling microphones were used by the singers which prevented feedback from the P.A. system, which was now behind them, eliminating the need for stage monitors that would normally bounce the sound around in an uncontrolled manner.

      The sound source for every instrument was now under complete control of the individual player and propagated from an apparent single point on stage, instead of randomly bouncing around the room in every direction. The vertical speaker column, or line-radiator, is now used at every concert venue for audience coverage.

      1. Yes, I wished I'd heard that setup, but I never caught the band in that period. They discontinued their version of in 1974 because of the sheer cost of maintaining it.

  4. Give it away music worked well in the past, and I give the Dead their due. But what about today? Does it still work as well? I hear from musicians that they can't make a living because their CD's don't sell because people can just grab the tune they like from the internet and put it on their ipod.

    I hope some pioneering rock bands find ways to help the young and not yet known muscians find a way to succeed.

    In a more global business view, so much business material is now free and so many jobs are lost. What sage wisdom do rock bands give those of us?

  5. Hi John,
    I've been following your blog with interest.
    In my frustration with the current grid-lock in American politics I've been wondering, "What would John do?"
    In an November post you said "some of the finest collaborative work is sparked by conflict".
    Given the current "conflict", I'm curious how you would facilitate a meeting between Obama and the Republicans?
    What lessons from Rock would you apply to break the logjam in the Senate Circus?

  6. Great Qs, Gerri. The trick, as the Dead discovered, is to give stuff away but make money on OTHER stuff. In addition to their free concerts and the free taping of their concerts the Dead made a GAZILLION dollars on paid gigs and CDs. The internet model is give things away and make money on the periphery. As an example, I just watched some YouTube clips of an amazing musical duo Pomplamoose. Now I'm hooked and will pay for more.
    They're already merchandising (T-shirts) and I assume they'll be performing live. Enterprising (and talented) performers will find a way to succeed in these times, just as enterprising and talented business teams often do. And there are still lotsa folks who honor copyrights and are willing to pay for their music. I spend more now on iTune downloads then I ever did on CDs.

  7. "In a more global business view, so much business material is now free and so many jobs are lost. What sage wisdom do rock bands give those of us?" Gerri, on second thought that question deserves a separate post, which I'll put up in the next week or two. Graham, I'll get back to you on your question, which also deserves an uncharacteristically thoughtful response from me. I'm not used to having to cerebrate this early in the day (or week).

  8. You've got me thinking now about "giving it away". Much of my early success as a performer was because of free gigs I did - getting people to know me, and now I can pretty much do a gig anywhere locally and be assured they'll be fans there. Venues like that and will pay me for it. Maybe I should start printing some multi-colored tee -shirts. Thanks for all your coaching, your the best.

  9. Vic, your success is a perfect example of giving it away. Now that you're a familiar local brand you have SO many options for how to make money - and continue to make a difference in the lives of preschoolers. As the premier "children's performer" in your area you can sell merchandising & CDs, as well as continue to do concerts, host sing-a-longs, etc. Also, through YouTube and other free media you can start to gain an international audience.

  10. Graham, as a former US Presidential aspirant I am of course appalled by the circular firing squad also known as the US government. The legislative processes alone need so much reform it relegates other issues to the margins. And I don't see many profiles in courage among the current members of Congress - who will need to make unpopular decisions in the short run to make a long-term impact on the various crises facing the government. (In all fairness, it's a lot to ask an elected official to make a decision that might shorten his or her tenure in office.)

    Having said all that, I’d be happy to facilitate a meeting between Obama and the Republicans, but only in the role of an organizational consultant who could give input. For starters they need a shared vision and goals for working together. (Without that, what's the point.) And with this much broken trust there are no shortcuts.

    Inexplicably, the White House hasn’t asked for my help, yet. (I did get a call from the Prez and the VP last month, but that was to troll for my vote for their candidate in the local election.)

    In answer to your other question re what “business lesson from rock” could help break the logjam in the Senate (or, I would say, in Congress as whole) I’ll expand on the last point. Focus the attention on the long-term vision rather than the problems along the way. If you have your eyes set on a “big, hairy, audacious goal” (to use a Jim Collins term) which inspires people to put aside their differences you have a better chance of success. (Something like Kennedy’s “man on the moon.”) The Beatles had a vision of success that included being “bigger than Elvis.” Every time there was a problem or a difficult decision to make, they would deal with it from the Elvis question. (And that goal was definitely an audacious one for a gang of scruffy 18-to-22-year-old Liverpool lads who didn't have a record contract.) Being bigger than Elvis was their inspiration AND compass. Now for any organization with as many diverse stakeholders as the US Congress it’s difficult to create an inspiring goal that’s mutually shared. Unfortunately it sometimes requires a national disaster (financial, military, environmental) to bring everyone together. But even 911 didn’t accomplish that with the Congress.

    So much for my short answer.

  11. It's not rocket science. The Dead's customer service evolved from their ability to relate to their audience -- as peers. That's why the Dead on stage looked like the audience off stage. Very little separation. In their Haight Ashbury days the band lived in the community, performed in the community, and got high in the community.

  12. Anonymous: the Dead were certainly ahead of their time in establishing user groups. (Did I just say that?) Your point is well-taken though. From everything I've seen and read, the band has had an egalitarian relationship with audience members, as well as with crew members. The term "compassionate capitalism" has been beaten to death, so all the more reason to apply it to the Dead.

  13. Good post, John. Yeah, I think sometimes we miss how many of these bands and artists have really handled their business well. You have pointed out many times here the lessons learned from both their successes and failures. Thanks for that. Awaiting your book!

  14. loodsI wonder if the real "secret" of the band's success was to apply the basic principle of doing what they were good at (music) and delegating the rest (business).

    A guy named Hal Kant looked after their commercial interests for many years. I'd argue that his main success was to make sure the band owned their master tapes and publishing rights - i.e. the main sources of money and the things that record companies often own. The free concerts, live taping and so forth was part of the band's way but having a very, very smart manager made it much, much easier to do.

  15. Mark, Hal Kant (no relation to Immanuel) deserves big-time credit for protecting the Dead's intellectual property and merchandising rights. (He was their general counsel, though, not their manager.) A conservative Republican no less - representing these deviants. Who'da thunk?

  16. Hi there! This post could not be written any better!

    Reading through this post reminds me of my good old room mate!
    He always kept talking about this. I will forward this article to him.
    Pretty sure he will have a good read. Thank you for sharing!

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